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The transmission of Supply Shocks to inflation: The case of Argentina (2004-2023)

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  • Ordoñez Lucas Sebastián

Abstract

This paper investigates how domestic and external supply shocks influence inflation in Argentina using the Local Projections methodology. We categorise supply shocks into two groups: domestic and external. Domestic supply shocks include the nominal exchange rate and regulated prices. In contrast, external supply shocks include international energy and food prices. The results reveal two main findings: First, both domestic and external supply shocks positively influence inflation. Second, there are significant variations in the magnitude and dynamic of how these supply shocks are transmitted to inflation. These insights offer a comprehensive understanding of how supply shocks influence inflationary processes in developing countries and small open economies, similar to Argentina.

Suggested Citation

  • Ordoñez Lucas Sebastián, 2024. "The transmission of Supply Shocks to inflation: The case of Argentina (2004-2023)," Asociación Argentina de Economía Política: Working Papers 4750, Asociación Argentina de Economía Política.
    • Handle: RePEc:aep:anales:4750
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    JEL classification:

    • E3 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles
    • C1 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General

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